Tip:
Highlight text to annotate it
X
PAUL JAY: Welcome to The Real News Network. I'm Paul Jay, coming to you today from Toronto.
And in Canada, two major strikes are on. Air Canada, the national airlines, and the Canadian
post office. Only weeks after the election of a majority Conservative government, this
new government, only days into these two strikes, announces it's going to pass legislation in
Parliament ending both strikes. The autoworkers, Canadian Auto Workers, who represent these
striking workers at Air Canada as of, I don't know, an hour ago, as we tape this interview,
have just come to a tentative--I shouldn't say tentative agreement--have come to an agreement
with Air Canada. Now joining us to talk about both strikes is Jim Stanford. He's an economist
at the Canadian Auto Workers union. Thanks for joining us, Jim.
JIM STANFORD: Oh, my pleasure.
JAY: Alright. So we were about to do the interview about the strike, and you walked in, you told
us there's actually a tentative agreement as of just a few minutes ago.
STANFORD: Yes. We reached it this morning.
JAY: So what's--first of all, what were the issues? And what's the deal?
STANFORD: The big issue, Paul, at the Air Canada strike was the pension plan. Air Canada,
like most pension plan sponsors, had a big deficit in the pension plan. That is, of course,
the legacy of the financial meltdown that happened in 2008 and 2009, as well as other
factors, like longer life expectancy and so on. But the main issue, the main problem was
the financial crisis. And then they were demanding the elimination of the defined benefit pension
plan for all future employees, and major, major cutbacks in the pensions for existing
workers as well. That was the dominant issue. If it hadn't have been for that, we would
have been able to reach an agreement with Air Canada without a work stoppage.
JAY: Okay. So let's break down what that means, first of all, defined benefit package versus
defined contribution [crosstalk]
STANFORD: Defined benefit is where the company agrees to pay you a certain pension that's
calculated in dollars based on your years of service, the number of years you worked
for the company, and the salary you were making when you were retired. It's the most secure
and reliable form of pension. The alternative is often called defined contribution. In essence,
it's not a pension plan; it's a savings account, a personalized savings account. The company
puts in a certain percentage of your income each year. It might be 3 percent, 4 percent.
Then you choose where you want it invested, and then you cross your fingers and hope that
when you retire there'll be enough money to live on--a very, very insecure system.
JAY: So if you had had your retirement in stock market and hit the 2008 crash, you might
not have had a pension.
STANFORD: Humungous risks that pensioners face under that system. First of all, how
did the markets perform? When did you retire? Did you retire at the peak of the roller coaster
or at the trough of the roller coaster? What are interest rates at when you retire? Because
the savings have to be converted into a lifetime annuity, and the interest rate at any given
point in time will determine how much income you get from that annuity. So enormous risks.
And the experience of recent years has really shown that personalized savings model is a
very, very poor approach to trying to plan for pensions. In fact, you can't plan for
pensions. There's been a lot more emphasis on the need to restore and strengthen the
defined benefits system, but corporations right now feel they've got the offensive,
and they're demanding the abolition of defined benefit pensions all around North America.
JAY: And they have the offensive because of high unemployment. They're able to threaten
people about their jobs.
STANFORD: Not to mention the fact that they clearly have governments in their corner in
the process, which is what we've seen in Technicolor with this strike in Canada.
JAY: Okay. So Air Canada's argument is: we took the hit because we're responsible for
paying you a defined benefit when the stock market goes down; why should we take that
risk? And how can we plan for the future, says Air Canada, if we have to suffer the
consequences?
STANFORD: And it's not easy, realistically, for companies to provide defined benefit plans.
I mean, this opposition doesn't come out of thin air. It is expensive and it is risky.
It's better that the company take the risk than the individuals. The best system of all,
Paul, would be a more comprehensive public pension system which covered all workers,
whether you were in a union or not, like in Canada our Canada Pension Plan or like in
America the Social Security system. Our Canada Pension Plan is very secure. It's the most
secure pension plan in the country. The problem is it only replaces about 25 percent of your
income when you retire. So if we were to expand the Canada Pension Plan, which is what unions
and antipoverty activists have proposed, that would take some of the pressure off the corporate-sponsored
plans. But, again, the Conservative government in Canada has no interest in doing that. They
want to leave it up to individuals to go out and invest and take the responsibility for
themselves, as they say.
JAY: They want the free market approach, except they didn't want the free market approach
when it came to negotiating your salary. Then there isn't a free market approach. Then they
want to illegalize the strikes. But let's back up a second. So Air Canada apparently
is facing a situation, and many companies across North America, particularly the older
ones, where they have more people on pension than they actually have working for them.
So they're saying, again, how are we supposed to deal with that situation? So do you get
any corporate buy-in to this idea that you should have an expanded public pension plan?
I mean, I guess it's somewhat the same way if General Motors actually liked the Canadian
public health care insurance plan, 'cause it took the burden off them. Why wouldn't
the corporate sector actually like this?
STANFORD: I think you would get some buy-in, actually, from employers, especially those
who are sponsoring their own plans that might be integrated with the Canada Pension Plan.
On the other hand, you've also got the majority of private sector employers that don't offer
any pension at all to their workers. For those employers, workers are a throwaway input.
You work your life, you turn 65, and you get thrown out onto the street with no compensation
for your pension at all. Those employers are the ones, especially the small-business community,
that very energetically opposed any expansion in the Canada Pension Plan because employers
are obliged to pay half of the cost of that plan. So I'd say, you know, from a company
like Air Canada, they could see the benefits of an expanded public plan, but for the business
community as a whole, they generally were not in favor of it.
JAY: They'd rather just shift the burden of the risk to [crosstalk]
STANFORD: Onto individuals and say--you know, it's again part of this ideology of individual
responsibility that's out there. If you want to, you know, eat something better than dog
food when you retire, it's up to you to save the money as you work, and it's up to you
to pick the right mutual fund to put that money into. And if you end up eating dog food,
it's your own fault. That is the model. It is a model that has failed miserably in countries
around the world. But that is the dominant ideology right now.
JAY: Now, in this new agreement, what happens with new employees? 'Cause Air Canada always
seemed more or less willing to make a kind of deal on existing employees, but they want
new employees not to have a defined benefit pension. Now, what happened to new employees
here?
STANFORD: So in terms of the existing workforce, the existing defined benefit pension plan
is preserved. The basic formulas are all in place. We'll make some fine-tuning adjustments
to some of the rules around early retirement and some of those issues, but more or less
the pension will remain in place. For new employees, where we were at loggerheads, the
company wanted to do away with the defined benefit principle entirely. The issue of the
pension plan for new employees will be referred to a neutral, third-party arbitrator. The
two sides will jointly pick the arbitrator, and the arbitrator will choose among the two
offers that the two sides put forward. So it remains to be seen. That's not--.
JAY: Why did you agree with that? 'Cause new employees are going to say, did you throw
us under the bus here?
STANFORD: Right. Well, and this is the divide-and-rule technique that employers use in trying these
two-tier or new-hire type models, 'cause the other side of the coin is that all the existing
workers are tempted to say, why am I out on strike experiencing all this cost for something
that isn't going to affect me at all? And that's what the companies bank on with this
approach. And it's up to us as a union movement to sort of maintain solidarity there and say,
look, there's principles at stake that we want to keep in place for the next generation.
That's how the union movement makes progress is over many long years of incremental improvements.
The key factor here, the monkey wrench that got thrown in, was the government after 16
hours of the strike indicated they were going to legislate the Air Canada workers back on
the job. They had all kinds of nonsense about how this was jeopardizing Canada's economic
recovery and other ridiculous claims. They clearly were just signaling that they were
going to take the employer's side in this fight, and they would legislate some kind
of arbitrated settlement to it.
JAY: Yeah. And you're saying "ridiculous", and I guess because only 1 percent of flights
were actually canceled because of the strike so far.
STANFORD: Well, and, I mean, does the country depend on one airline? That's nonsense. There
are other competing airlines. That's one of Air Canada's problems. There was no--you couldn't
find two serious economists in the country who would agree that this strike was jeopardizing
Canada's economic recovery. This is just the Conservatives' all-purpose line now to justify
anything they want to do, including unprecedented intrusions into private negotiations between
private parties. Air Canada is not a government operation. It's an airline. So this was shocking.
It took all kinds of people aback at how the--I guess now that they have a majority, the velvet
glove has come off, and the Conservatives really showed whose side they were on. And
so, in our judgment, referring the new-hire issue to an arbitrator, where we could negotiate
the terms of the reference to the arbitrator so it would be a more neutral process, that
was preferable for us than having the Conservatives basically dictate the content of the final
settlement.
JAY: And given the sort of history or precedents with arbitrators, it would be a pretty big
decision for an arbitrator to get rid of defined benefit pension plan would be such an enormous
decision [crosstalk]
STANFORD: Right. In a classic arbitration setting, you don't expect dramatic change
to come from an arbitrator. They usually try to, you know, cut the difference between the
two sides and come up with an agreement that looks sort of mutual or middle-of-the-road
or whatever. That's the tradition in arbitration. The Conservative legislation was clearly contemplating
something different. Basically, the arbitrator would be doing the dirty work for the company.
It will be a risk for us. It's not our preference to do it this way. We have other experience
with arbitration in pension matters. I think if we can present the case to the arbitrator
that a defined benefit plan is sustainable and reasonable and a fair thing to do for
the workers, then we have a shot at preserving the principle of defined benefits for new
hires.
JAY: And what happens if the arbitration goes the wrong way from your point of view?
STANFORD: Well, that will be an enormous setback, and it's a setback that has been accomplished
elsewhere. As you know, many, many companies, including most airlines in the US, many manufacturing
companies, the major automakers in the US, global mining companies like Vale, they have
all been making that elimination of defined benefit pensions a defined centerpiece of
their demands from their unions, and more often than not they have won that demand.
So we are determined to stem the tide as much as we can. And this is where the labor movement
has to step up. But government also has a role to play, because the pension system sets
the context for workplace pensions. So if the government was actually interested in
protecting workers' pensions, they would expand the public system, they would put in place
a more stable, sustainable funding system for workplace plans and some kind of insurance
or backstop plan for private pensions in cases when the company goes out of business. Even
the US has a system like that. But in Canada we don't. That would be, I think, the preferable
approach for policy. Unfortunately, this government has already indicated that they are going
to use the power of the state to enhance the demands of private companies trying to take
stuff away from workers. It's shocking and it's shameful.
JAY: Thanks for joining us.
STANFORD: My pleasure, Paul.
JAY: Thank you for joining us on The Real News Network.